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Consumer group says tort cost estimates are ‘highly exaggerated’

Insurance & Financial Advisor

Monday, February 8, 2010

The U.S. tort system, seen by many as the best area to focus health care reform, is not as costly a system as some suggest, according to a new analysis by a consumer coalition.
Americans for Insurance Reform (AIR) disagrees with the recent Towers Perrin (now Towers Watson) report, suggesting that the U.S. tort system costs $254.7 billion.
AIR called the Towers Watson figure “highly exaggerated and misleading, based on unverifiable and flawed work, and is completely inappropriate for evaluating the U.S. tort system,” according to a statement.
The AIR analysis points out that Towers Perrin report, “2009 Update on U.S. Tort Cost Trends,” found that tort system costs are growing slower than medical inflation, that medical malpractice trends are stable, that the U.S. tort cost environment is “relatively benign,” and that costs are less today, compared to GDP, than they were in 1983.
J. Robert Hunter, a AIR actuary and former Texas insurance commissioner who wrote the AIR report with Joanne Doroshow, executive director of the Center for Justice & Democracy, said the Towers report fails to include the cost of jury verdicts, settlements lawyers’ fees and court costs in the tort system. It also focuses solely on insurance losses, regardless of whether a suit was filed, and it adjusts figures “without any basis” and fails to provide explanations or sources.
“It is really past time for Towers to stop publishing such flawed data year after year,” Hunter said in a statement. “The fact that they persist despite criticism after criticism shows a deep disdain for fair and accurate presentation of facts.”
Doroshow added that the Towers report “gives no credence whatsoever to any notion that tort costs are out of line, particularly medical malpractice costs.”

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